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Monday, April 30, 2012

Waiting to blow

Estimates from local and foreign watchdogs show corruption now swallowing between a third and half of Russia's gross domestic product and state spending rising on inefficient projects.

Rapid growth in spending has already widened Russia's non-oil and gas fiscal deficit to 10 percent of GDP..It has also pushed up the fiscal break even oil price to around $117 per barrel for 2012.Economists worry that things may grow even more troublesome if Putin keeps his promise and spends around $170 billion on a six-year social programme he touted during his election campaign..Some estimate that these added costs would push the oil price that Russia needs to break even as high as $130..While things might remain stable for a while yet, corruption is now totally endemic..Many Russian bureaucrats actually believe it is their right to steal money..And in a recent research survey said that they saw nothing wrong in so doing..When corruption becomes endemic social unrest increases..To tackle endemic corruption requires agreement of the countries leaders..This cannot be achieved when many of these are also involved..Catch 22 for Putin..One thing can be said with certainty..The situation will not continue without further unrest at some point..At what point?.Probably through an event that is not foreseeable today..A black swan..Russia is not the same place it was ten years ago..Not sure that the leaders 'get it'..Not sure they care either..However events are likely to change this attitude..Sadly it remains a dream that Russia will one day have the rule of law.That one day it will have an independent media and judicial system..However without these three legs of government, media and the judicial system being autonomous and acting as a check and balance on each other nothing much can change.